ADVANTAGES
It is very scientific and logical
It is based upon the real profitability of projects.
It is very useful to compare the projects having different investments.
It reflects time value of money.
It considers all cash flows during the life of the project
DISADVANTAGES
It is comparatively difficult to understand and follow
This method is not in accordance with accounting principals
It cannot be used for comparing those projects having unequal lives.
It is difficult to estimate effective life of a project.
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